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Reader Tip: We’re saving $200 per year by switching to “Time of Use” energy plan

Lisa submitted the following tip:

We recently switched to a “Time of Use” plan with our energy company. Rather than a flat rate for electricity, our rate now varies depending on the time of day. The rates for off-peak times are one-third of what they used to be, while the rates for peak times are twice as much. Programs vary, but our peak times are Monday through Friday from 10AM to 9PM. Everything else (plus designated holidays) is considered off-peak.

If you can shift 65% of your electricity usage to off-peak times, you will start to save. We now only do our big ticket energy activities (laundry and dishwasher) during off-peak hours. We’ve also shifted many other activities like charging the laptop and baking to help the savings grow. Note that this program is for electricity only, so our gas rates (which is how we heat our home) remain the same.

We also find that we’re more likely to play a family game rather than watch a movie or go for a walk rather than waste time on the computer. Regardless of the dollar savings, our family has definitely benefited from this program.

After three months, we have already saved 25% off last year’s electric bills. At this rate, the savings will be saving over $200 this year. -Lisa

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55 Comments

  • Allison V. says:

    When I lived with my brother’s family in Seattle, they had this and I thought it was the strangest thing. I don’t think that’s an option here in Kansas.

    • LifeAsAMomma says:

      Allison, if you view my comment below, I am also from Kansas and have heard of a different kind of program in Kansas. Like I said in my statement, I don’t know the specifics on the program but it would be worth checking in to!

    • Tammy L says:

      I live in the Seattle area, and looked into this a while back… apparently it was discontinued in our area because most people experienced an increase in their bills vs. a decrease. 🙁

      All the more motivation to hang my laundry outside (as if I needed it ;d). ONE partly-sunny day this week and I dried two huge loads outside! Yay! 😀

  • Wendy says:

    I think this is great if you can do it. I’m not sure I could because if I had to shift all the laundry I do during the week until after 9 pm I’m afraid I would be up way too late! 🙂

    • Kristine says:

      That’s what I was thinking, and it’s just easier for me to do housework while the kids are in school. I’m too tired after 9 p.m.

    • Fay says:

      You could do your laundry on the weekends when the time of use plan is typically off-peak. We save a couple of hundred dollars a year also using the time of use plan vs. the regular plan. The summer time of use hours are different than the winter time of use. Right now we are still in the winter hours and our off peak hours are from 9am through 5pm so I can do plenty of laundry during the daytime hours. 🙂

    • Lisa (the poster) says:

      It all depends on the hours of your program (if it’s even available). Ours is “off peak” all weekend and every morning until 10. If you don’t think it will work with your lifestyle (and it doesn’t work for everyone), I don’t recommend it. It could end up costing you more money than you pay now if you can’t shift enough away from the peak hours.

  • Elizabeth says:

    I just signed us up for a pilot program like that in PA… I’m a bit worried because my husband works from home, but we’ll see. They’re going to it here in 2013 anyway….

    • erica says:

      Elizabeth (and Jen too),
      Time of use is really hard to get any benefit out of when you are home all day, most days. My husband works from home and I’m a SAHM, so we are here all the time too. He’s an electrical engineer and has the ability to monitor our usage throughout the day. When a similar program came up through our Co-Op we very much tried to make it work, (dishwasher, laundry, showers, all off-peak) but with us being home it was maybe $1-2 difference per month (we have geothermal heat with elect back up). Mostly because we were keeping heat/A/C at reasonable temperatures, if you are gone to work and can scale back your house temp for those 8 hours, it would probably be much more worth it.

    • Holly says:

      Elizabeth – who is your electric company? I am in PA also. I remember seeing something about this once, but not recently. I think I could make this program work for our family.

      • Katie says:

        Holly – we’re also in PA (with PPL), and just got something from them about a new program they’re starting that has something to do with this.

  • Jen says:

    That sure would be a challenge, with 5 of us home ALL THE TIME! I’d have to get up early to do laundry before the cut-off – I have a feeling I’d always have a mountain of dirty clothes! No dishwasher, though, so that wouldn’t be an issue.

    • Fay says:

      Are you in PA also? The time of use hours vary from company to company and state to state. Check our your program in the area you live in.

  • Carla Sorensen says:

    Definitely another thing to look into and consider on my journey to frugality and saving money. Thank you so much for the post!
    Best to you! 🙂

  • Great advice! I’ll have to look into that with my electric company. It’s now 10:30pm and my daughter is just now doing laundry and she doesn’t even know she’s saving mommy money. 🙂

  • Noah says:

    I think the savings would really depend on what your appliances run on. We have a gas water heater and gas dryer, as well as gas oven/stove. I imagine we don’t use all that much electricity running those things since it’s mostly natural gas, so a plan like this probably wouldn’t save us much, if any.

    • Fay says:

      We have a gas dryer, water heater, gas oven and stove top and also our heating system is on gas and we still manage to save $200 or more a year. It really helps us with the time of use plan and oh, I am a stay at home mom and we are mostly home all day.

  • Mrs W says:

    is the electricity turned off during peak times? Or do they give you a discount when you use electricity during non-peak times?

    • Jennifer says:

      No, it’s not turned off (at least not in Phoenix) They just charge you more to use it during that time and charge less if you use it during off-peak hours.

    • Lisa (the poster) says:

      No, it’s not turned off. It just costs more during peak times.

  • Meg says:

    I’ll have to look into this in my area. I tend to be a night owl anyway and already do most of the energy-heavy things, like laundry, at night. It’s worth a test run if it’s available here. Thanks for the idea!

  • LifeAsAMomma says:

    I live in Kansas and I have heard of a program offered that will automatically shut the use of my air conditioner off for a certain amount of time every few hours to save energy. (I think for about 15 minutes for every two hours…?)
    One of my daycare parent’s told me they use it and have saved a bunch! I do not know any of the specifics, but I really need to check into it!

    • Allison V. says:

      That would be great, because I work and no one is home during the day, and I don’t have a nifty thermostat in my apartment. I wonder how that can even work?

      • Michele says:

        I live in Kansas also, and just got the information in my bill this week. Westar comes to your home and installs a programmable thermostat (at no charge). Then they monitor your usage and cut your A/C for the 15 minutes every 2-3 hours. As long as it’s voluntary, I think it’s a nice option for some people. Being home during the day, though, I would really not be a fan of this.

    • Kristine says:

      I live in Kansas, too. 🙂 I don’t think that would work for me, though, because I’m home most of the time. I’m sure it would be helpful for people who work outside the home.

  • Beck says:

    I used a program like this in Va. Beach, VA. It worked great since we were at work most of the day. I think it saved us a lot of the money.

    Now we are on a program that attaches a switch to our A/C unit and if there is a high demand use they shut your A/C off for about 15 minutes, in exchange you get a $5 credit every month. It has worked great and we have never noticed the house getting hot.

  • Jennifer says:

    Here in Phoenix, AZ, we have the option of “time-of-use” which is from 9-9 weekdays, or we have the “easy-3” program, which is from 3pm to 6pm on weekdays.

    Being that it gets so hot here six+ months out of the year, going without air conditioning all day, or having it on at 80 or above was just not an option for us. But, to only have to do it for three hours, during which time we go swimming, works for us. We have saved over $50 per bill just by not using major appliances and air conditioning from 3-6.

    To answer someone’s question above, the electricity is not turned off, they just charge you a higher rate during those hours and a lower rate during the off peak hours.

    • Stacy says:

      I live in Phoenix, so we may have to look into the 3-6 program more carefully, especially if the cost savings is that much. Problem is that’s when I get home from work and I want it to be reasonably cool inside (no pool).

    • Camille says:

      I wish we had that in Vegas! We do have Time of Use from 1-7 PM, but I’m not sure how we’d do as that runs right in to dinner for us.

      • Jennifer says:

        Yes, we like to eat around 5, so I do have to cook during that time. But, just by not using every thing, we save. The first money we did it was July 2010 and we saved $80 on our bill.

      • Lisa (the poster) says:

        When we first joined the the program, I didn’t make any changes to our dinner plans and we still saved money. We were eating a lot of casseroles, etc. I’ve now converted more meals to crockpots (which are way cheaper than the oven) and more grilled dinners. The simplified, no fuss plan has been so much easier and saved a little extra on the electrical bill as well.

  • Judy says:

    They are still in the testing phases of this program here in OK. Last year we did end up saving some, and signed up because they guaranteed that if we went over at all, they would refund the excess electricity at the end of the summer. I’ve already signed up for it this summer and feel motivated to save even more!

  • Ashley says:

    This would be great for my husband and me. We are full time students who attend school in the morning then we work noon until 9pm.

  • It is at night then? I don’t do laundry at night as it scares me to use the dryer while we are sleeping.

    • Lisa (the poster) says:

      The hours vary with different electric companies. Our off-peak times are overnight, early mornings (until 10) and weekends. I usually start a load of wash before I go to bed and put in the dryer when I wake up. If I am home that day (my schedule varies), I can usually get up to 3 loads done before the rate changes.

  • Becky says:

    We have been doing this for the last 14 years. We are on from 9 PM thru 9 AM during the week and on weekends, Friday 9 PM thru 9 AM on Monday. We got used to it. The actual power that we use is not much, BUT all of the taxes and fees are outrageus. They are more than our actual usage. 50% of our bill is for fees! I live in AZ.

  • Laurie says:

    We are on a plan like this. It came with the house. Our cheap rates are from 11AM-4:30PM and 10PM to 6:30AM every day. Our electric company is trying to talk us into changing to a regular rate plan. When we first moved into this house they didn’t tell us that our rates were different, just that our heating and AC and water heater cut off at certain times of the day. So our first few months were very expensive because we didn’t know we should be running the appliances at certains times of the day. Now we have the hang of it and I wouldn’t switch. A lot of my friends and family think I’m strange for putting up with it but then I’m the only thrifty one in the bunch. They won’t be laughing when we pay cash for the kids college and our house is paid for in 10 years (my goal)

  • I live in Massachusetts and we get these statements from the electric company that compares our personal usage with that of our neighbors. I am always higher than my neighbors but I work from home so I know my bill will always be higher than theirs. I do like this idea though and want to see if they have a similar program here in the Northeast.

    • Stephanie says:

      Me to0. Between being home all day and cloth diapering (using the dryer a LOT in the winter) we are higher than most of our neighbors as well. Our neighborhood is odd in that it is a mix of families with little kids and older people with paid off homes so I try not to wig out and compare our energy usage with the 80 year old widow down the street 🙂
      If they could compare similar demographics I would be thrilled.

  • Teena Jackson says:

    I lived in AZ till ’03 and know of the time of use program. It was a huge savings for us for the 8 years we used it. 3 states later, I wish I had it now! I live in Connecticut now and miss the affordability of the Southwest, Midwest and South. Trust me, don’t move to the Northeast – It is a financial nightmare for those of us who try to live & tread lightly!

  • We have an all electric house and a SmartMeter was recently installed and the electric utility sent information on rates, etc. We talked with them at length and their off peak rates would not have saved us any money, unfortunately.

  • Kansas Mom says:

    Some companies also charge more if you are using a large amount of electricity at the same time. So, for example, if you run your dishwasher than your washing machine, you pay one rate. But if you run them at the same time and cross a threshold, you pay a higher rate. You should be knowledgeable about your rates because you could save money by making sure you’re not running everything at the same time. Then, even if you’re not on this particular savings plan, you might save money in the summer by running your laundry or your dishwasher early in the morning or late at night so they aren’t running when the air conditioner is running.

    Not us, though. We have the same rate no matter what.

  • Alyssa says:

    am I the only person that gets headaches from those bulbs? I like the idea of them, but can’t read under them :(.

  • Amanda says:

    We tried this a few years back and found it actually cost us MORE money to do it b/c I was home with the kids all day. It doesn’t work for everyone but glad it worked for you 🙂

    • Lisa (the poster) says:

      No, it definitely wouldn’t work for everyone. It all depends on the specifics of the program available to you, your schedule and your lifestyle.

  • Anna says:

    I live in Illinois and am enrolled in a program like this. I am a stay at home mom and we still save money on this program. Our peak energy hours are not basically the whole day like the tip says. Our is mainly from around 4-6 pm. We had to enroll for a whole year when we first started, but I am very happy with our savings. We received a statement showing how much we saved in the last year and it was around $150 for the year. One month we paid more than if we had the regular energy plan, but most of the other months we saved significantly. Now, if only we could get some-sort of discount for our natural gas!

    • Laura says:

      I know there is an ESCO for NICOR territory in llIinois. You should be able to save on your gas bill this way.

  • Tracy says:

    Thank you! This post has motivated me to look into our electric company’s programs again. We focused on lowering our grocery expense by $200 a month and won that battle. Got rid of our cable expense, but still have lots to watch on our Roku box and antenna and now the energy bill will be the next challenge, especially with the warmer months ahead. Thanks for the inspiration!

  • Laura says:

    NY also has a plan like that and combined with an ESCO you can save even more . There are many ESCO’s to choose from. I believe if you go to a web site called poweryourway.com there is a list. Your gas and electric company should also have a list on there sites. This is only for the supply portion of your bill. I’ve been doing this for three years and have saved significantly. I don’t know about other companies but the company I use is in Illinois,Maryland,Texas,NY and recently PA. You should be able to compare rates from all the ESCO’s with what your company is currently charging for your supply and pick the one thats right for you. Nothing changes. Your still billed by your regular company and they handle any service problems. You just save money by choosing an alternate supplier.

  • Tammy E says:

    We signed up for the TOU program about 6 weeks ago in PA, and although we used 2000 kw more our bill was $63 less this month. Our peak times are from 5-7pm but will expand when summer comes to
    2-8 pm. It does make us think before we do certain things like start the dishwasher or washing machine. My 15 yr. old son even asked me the other night if it was 7:00 and when I asked why he said I want to take a shower, won’t that start the hot water heater? whoooo hooo it has made him conscience.

  • Suzanne says:

    Our electric coop is wanting us to join in their program that allows them to cycle off our ac and water heater. The dollar amount they quoted we would save seemed low – less than $50.00.
    Am I the only person that objects to this based on the fact that I don’t want big brother controlling my utilities? A missionary friend in the Ukraine mentions when the gov’t turns on their heat. Could we in the US get there?
    I do watch our “beat the peak” meter that we have in the kitchen, and cut back usage of dishwasher and laundry during the red light time periods. I just want to control it myself.

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